The case emphasises that outcomes depend on how benefits are structured and documented, directly influencing remuneration design, governance practices, and a business’s overall tax risk. The court delivered its decision on 27 March 2026 in SEPL Pty Ltd as trustee of the SFT Trust v Commissioner of Taxation [2026] FCAFC 36, allowing SEPL’s appeal. The ruling is also relevant for trustees, directors, and advisers providing non‑cash benefits to working family members.

Key questions on FBT

SEPL Pty Ltd as trustee of the SFT Trust v Commissioner of Taxation is one of the most instructive FBT cases in recent years, tracing a path from the Administrative Appeals Tribunal (AAT), through to a single judge of the Federal Court, and finally to the Full Federal Court.

The litigation pivots on two deceptively simple questions:

• When are working owners of a family trust business ‘employees’ for FBT purposes?
• When is the provision of luxury motor vehicles a ‘fringe benefit’ rather than a benefit conferred by reason of ownership or beneficial entitlement?

The answers, it turns out, are far from straightforward.

The background: A large family business

SEPL Pty Ltd was the corporate trustee of the SFT Trust, a commercially substantial family business. The trust was established in 1987 and following the father’s death in 2009 and the mother’s retirement as director in 2014, control passed to three brothers who became the sole directors and shareholders of SEPL.

The brothers worked long hours in executive roles. Despite this, they received no salary. Instead, they benefited in two ways:

• profits were distributed to each brother’s family trust
• each brother had exclusive personal use of luxury motor vehicles owned by SEPL.

Over 40 such vehicles were held during the relevant FBT years (2016–2020).

Vehicle expenses were debited to their mother’s beneficiary loan account and subsequently cleared through grossed-up trust distributions to cover her resulting income tax liability. There were no board resolutions authorising the vehicles as distributions to the brothers individually, and no amounts were recorded as distributions to their personal beneficiary accounts.

The Commissioner issued amended FBT assessments on the basis that the brothers were employees and the vehicles constituted fringe benefits. SEPL objected, and on disallowance, applied to the AAT for review.

The AAT confirms the brothers were owners, not employees

The AAT set aside the Commissioner’s assessments. Applying what it described as a holistic analysis — informed in part by common law employment principles — the Tribunal concluded the brothers were not employees of SEPL for FBT purposes.

The Tribunal emphasised the absence of written employment contracts, formal remuneration, and board resolutions establishing employment. It also noted that the brothers operated at the apex of the business rather than within a conventional hierarchy. These factors pointed away from a contract of service and towards proprietorial control.

On the second issue — whether the vehicles were provided ‘in respect of’ any employment — the Tribunal also found in favour of SEPL. Drawing on the Full Federal Court’s reasoning in J & G Knowles and Associates Pty Ltd v Commissioner of Taxation [2000] FCA 196, the Tribunal held that the test requires a sufficient or material connection between the benefit and the employment, not merely a causal link. It concluded that the brothers accessed the vehicles as beneficiaries and proprietors of the family trust, reflecting their status as ultimate controllers of the business, rather than as remuneration for services rendered.

Federal Court affirms the FBT assessments

The Commissioner appealed, and Justice O’Sullivan allowed the appeal, setting aside the AAT’s decision and affirming the FBT assessments.

On the employment question, the primary judge held that the Tribunal had erred by importing common law concepts of employment into a statutory framework that provided its own complete definitions. The fringe benefits tax assessment act (FBTAA) was to be read on its own terms. The key provision was section 137, which the Court treated as a deeming mechanism: if a non-cash benefit, had it been paid in cash, would have constituted ‘salary or wages’, then the recipient is to be treated as an employee. Applying this test, the Court found the condition satisfied, noting that a cash payment of equivalent value would have engaged the withholding obligations, and therefore held that the brothers were employees.

On the ‘in respect of’ question, the Court rejected the Tribunal’s focus on the brothers’ subjective belief that they were entitled to the vehicles as beneficiaries. The correct inquiry was objective: was there a sufficient or material connection between the benefit and the employment? Given the brothers’ executive roles, their operational immersion in the business, and the absence of any resolution treating the vehicles as trust distributions, the Court found the connection clear. The appeal was allowed, and the assessments were reinstated.

Full Federal Court restores the AAT outcome

SEPL appealed. A Full Court allowed the appeal and restored the AAT’s outcome.

On the first issue, the Full Court identified four errors in the primary judge’s approach.

• First, the primary judge had focused on the definition of ‘employment’ in section 136(1) rather than the operative concept of ‘employee’. The Full Court explained that ‘employment’ is descriptive of what a person has once they are an employee — it does not expand or lead the inquiry into whether a person qualifies as one.

• Second, section 137 was misconstrued. The Full Court emphasised that section 137 is a confined hypothetical exercise, not a free-standing deeming mechanism. Before section 137 can operate to treat a benefit as ‘salary or wages’, the third condition in section 137(1)(c)(i) must be met: the hypothetical cash payment must constitute salary or wages paid to the person, which, via the definition of ‘salary or wages’ and the reference to section 12-35 of Schedule 1 to the TAA, requires that the cash would have been paid to the person ‘as an employee’. This inquiry necessarily invokes the ordinary, common law, meaning of ‘employee’. The Tribunal was therefore correct to consider common law principles in this context.

• Third, the primary judge treated section 137 as automatically converting every non-cash benefit received by a person performing work into salary or wages. That was an error. The provision does not deem an employment relationship into existence, it merely operates on the concept of salary or wages where all three statutory conditions are independently satisfied.

• Fourth, the primary judge had also relied on section 12-40 of Schedule 1 (relating to payments to company directors), even though the Commissioner had expressly disavowed reliance on that provision before the Tribunal and the primary judge, and it was not part of the questions of law that enlivened the Court’s section 44 jurisdiction. That reliance was not permissible.

Applying the proper statutory framework, the Full Court held that it was open to the Tribunal to conclude that any hypothetical cash payment would have been made to the brothers in their capacities as proprietors and beneficiaries, not as employees, and that the condition in section 137(1)(c)(i) was therefore not satisfied. The Tribunal’s conclusion that the brothers were not employees was not only available but also well-supported by the facts.

On the second issue, the Full Court confirmed the Tribunal’s approach. The ‘in respect of’ test requires a sufficient or material connection between the benefit and the employment; causation alone is insufficient. In this case, the brothers’ access to the vehicles was tied to their proprietorial and beneficial capacities: the mechanism of debiting vehicle costs to the matriarch’s beneficiary account and clearing those debits through grossed-up trust distributions was fundamentally inconsistent with a remuneration arrangement. The Full Court rejected the primary judge’s approach of treating operational involvement in the business as determinative without separately considering the materiality of the employment connection against the competing proprietorial explanation.

The Full Court confirmed that a benefit may be causally referable to multiple sources. The presence of an employment relationship does not compel a finding that the benefit is provided ‘in respect of’ that employment if a sufficiently material explanation lies elsewhere, in this case, in the brothers’ ownership and beneficiary status.

Key takeaways

Common law still matters under the FBTAA. To apply section 137, you must ask whether a hypothetical cash payment would have been made to the person as an employee. That question calls for the ordinary common law meaning of the term. The statute does not fully define it away.

Section 137 has a limited and targeted role and is not a mechanism that converts all non-cash benefits into remuneration. Each of the three conditions in section 137(1) must be independently satisfied, including, critically, that the hypothetical cash equivalent would have been paid to the person as an employee rather than as a proprietor or beneficiary.

The ‘in respect of employment’ test requires substantive connection, not mere proximity. Benefits that arise from ownership, family relationship, or beneficial entitlement may properly sit outside the FBT regime, even where the recipient also performs executive functions in the business.

Documentation matters enormously in family business contexts. The absence of resolutions recording vehicle access as a trust distribution — while ultimately supporting SEPL’s case — created the ambiguity that drove three rounds of litigation. Clear and consistent documentation of the basis on which benefits are provided will always reduce exposure.

Where business is conducted through a company rather than a trust, Division 7A may also be relevant. If a private company provides a non-cash benefit to a shareholder-director, it is necessary to consider whether that benefit constitutes a deemed dividend under section 109CA of the ITAA 1936, noting that Division 7A operates to the exclusion of FBT in relation to loans and forgiven amounts (section 109ZB, ITAA 1936).

How SW can help

The SEPL decision provides welcome clarity on the limits of FBT in family trust structures, but it also highlights how finely balanced these issues can be. Outcomes will continue to turn on facts, characterisation, and documentation. Engaging our experts early will help you navigate complex FBT rules with confidence, protect family business arrangements, minimise FBT exposure, and reduce the risk of prolonged disputes.

Please contact your SW advisor for tailored support from our team.

Contributors

Rahul Sanghani

Natalie Wang

The post SEPL case update: Ownership vs employment implications for fringe benefits tax appeared first on SW Accountants & Advisors.

During the session, our experts will provide insights and actionable knowledge that will empower your organisation to navigate the complexities of the current tax landscape with confidence.

During these webinars our tax experts will provide an update on:

• New Developments: Examine recent cases and the Australian Taxation Office’s (ATO) Fringe Benefits Tax (FBT) compliance activities. This session will cover hot topics including guidance on electric vehicles, and recent updates in the application of the otherwise deductible rule, helping you understand their implications on your organisation.
• FBT Focus: In addition to a recap on the basics of some common benefits, explore hot topics in FBT, including FBT record-keeping concessions and recent updates in the application of the otherwise deductible rule, helping you understand their implications on your sector. Special emphasis on exempt electric vehicles, reflecting the shift towards sustainable practices.
• Global Mobility: Learn about proposed tax residency changes and how they intertwine with flexible remote working arrangements.
• Superannuation: Gain insights into ATO audit activities, powers of the FWO and their potential impact on your organisation. Additionally, prepare for the upcoming legislative changes requiring employers to pay super on payday from 1 July 2026, aligning superannuation guarantee payments with wage payment frequencies.
• Employee vs Contractor: Understand the ATO’s updated rulings and how they affect your workforce management.
• Payroll Tax: Stay informed about the latest developments in Payroll Tax. This segment will focus on the application of relevant contract provisions, the implications of the new temporary Payroll Tax surcharge, new payroll tax obligations for some private schools in Victoria and the impact of increased thresholds. We will also speak about how to make your payroll tax return preparation processes more efficient and reduce the chance of error. 
• Wage remediation: Wage underpayments continue to be the focus of media and government scrutiny and can have immense adverse effects on employers. We will speak about some common causes of wage underpayments, how STP 2 and payday super may super charge audit activity and the role of tax practitioners in the wage remediation process.

Webinar recordings

Session details

Session 1 | Employment Tax update: Corporate sector

Date

Wednesday 20 March 2024

Location

Online nationally – via Zoom webinar

Time

1.30pm – 2.30pm (AEDT)

10.30am – 11.30am (Perth)

12.30pm – 1.30pm (Brisbane)

Register

Session 2 | Employment Tax update: Not-for-Profit and Government sectors

Date

Thursday 21 March 2024

Location

Online or SW Melbourne office, Level 10, 530 Collins Street, Melbourne

Time

1.00pm arrival for a 1.30pm start, concludes 2.30pm (AEDT)

Light lunch will be provided in the SW Melbourne office for those attending in person

Register

Expert speakers

Stephen O’Flynn
Tax Director
SW

Sam Morris
Director
SW

Paul Hum
Employment Taxes Director
SW

Helen Wicker
Director
SW

Justin Batticciotto
Associate Director 
SW

Rahul Sanghani
Associate Director 
SW

The post Employment Taxes update 2024   appeared first on SW Accountants & Advisors.

Christmas celebrations are a wonderful way to end the calendar year, reflect and celebrate with your team. Find out if your Christmas events and gifts may be subject to FBT. While your staff enjoy the party, make sure your festive activities make sure you aware of tax implications.  

Christmas events

Food and drinks provided at Christmas events could fall into the entertainment benefit category which may attract FBT based on several factors. These include:

1. Location of the Party: Whether it is held on-site or off-site.
2. Timing of the Party: If it’s during normal business hours or outside these hours.
3. Cost Per Head: The total expenditure per attendee.
4. Types of Attendees: Whether only employees, clients, or family members are present.

Parties held on business premises during ordinary hours of work

If your Christmas party is held on the business premises during a normal working day, no FBT is payable for food and drinks. This constitutes an exempt property benefit, rendering the entire cost of the party FBT exempt.

However, this concession applies exclusively to food and drink provided to employees. If food and drinks are provided to an employee’s associate (like family members), this portion will not be exempt and may attract FBT.

This exemption can only apply to property consumed on premises and other types of benefits may be subject to FBT (e.g. it will not apply to the cost of performers).

Parties not held on business premises or outside ordinary hours of work

For parties held off-site (such as in a restaurant) or outside regular business hours, the minor benefit exemption might apply.

To be eligible for this exemption, broadly the cost per person (inclusive of GST) must be less than $300, and the benefit should be provided on an irregular and infrequent basis.

Income tax-exempt entities – special considerations

Entities like government departments, universities, and some schools, which are exempt from Income Tax, face more stringent FBT rules for entertainment as the exemptions described above (i.e. exempt property benefit and minor benefits exemptions) are not available. For these organisations, the entire cost of food and drinks will attract FBT unless a particular exclusion applies such as:

• it qualifies as sustenance
• light refreshments that is incidental to the provision of entertainment to outsiders or
• it is provided as part of your hospitality business.

In addition, income tax exempt entities may utilise other concessions such as the 50/50 method to reduce the overall FBT cost.

Restrictions on concessions for tax exempt body entertainment benefits apply only to meal entertainment. Therefore, it becomes more important to determine which benefits should be considered entertainment, and/or what proportions may be subject to reportable fringe benefit rules (i.e. reportable on employee Income Statements).

Christmas gifts

For non-entertainment benefits like gifts or hampers, the ATO has confirmed that these are generally treated as separate non-associated benefits under the minor benefits exemption rule. For example, an employer can provide the following benefits and still remain within the bounds of the minor benefits exemption:

• food and drink at a Christmas Party costing $275 per person and
• a gift hamper costing $100 per person.

This seems to be a special case for Christmas gifts and events, where the minor benefits exemption and its $300 threshold can be applied separately to the gift without also considering the value of associated Christmas events.

This special treatment does not apply to the Christmas parties which could be made up of several distinct benefits in its own right (e.g. dinner and a social event or performance), These distinct benefits could be considered similar or associate benefits, and their combined costs must be considered collectively. If the combined costs are considered significant, then the minor benefits exemption is not likely to apply, Take, for instance, the expenses of a Christmas party. If the cost for food and drinks per person is $300, and the additional entertainment also amounts to $300 per head, the aggregate expense of $600 per person should be evaluated. Given this combined figure, it’s not likely that the minor benefits exemption would apply, as the total cost for these associated benefits is significant.

The minor benefits exemption is a practical way for employers to provide certain benefits without incurring FBT. To maximise this exemption, make sure you carefully plan and document the costs and frequency of these benefits to avoid doubling the cost of an event.

Get in touch with us

For personalised advice on the FBT implications for Christmas parties and gifts please contact your SW advisor.

We can also assist employers saving time and streamlining your FBT return process using our FBT software, CTSplus FBT. For more information on CTSplus FBT, please send us an email.

Contributors

Rahul Sanghani

Sharon Lee

The post FBT implications for Christmas parties & gifts appeared first on SW Accountants & Advisors.

While the earlier legislative instruments focused on travel benefits, these new instruments broaden the scope to include other areas such as Living-Away-From-Home Allowances (LAFHA) and private use of vehicles other than cars. 

The ATO is progressively making it easier to comply with FBT obligations by offering more flexible record-keeping options. Employers now have a wider array of records they can rely on, which can be particularly beneficial for those who already maintain such records for other operational or compliance purposes. This not only simplifies the administrative process but also reduces the risk of non-compliance due to incomplete or missing employee declarations. 

Summary of key points from the five additional Legislative Instruments 

• LI 2023/D18 Temporary Accommodation Relating to Relocation: Employers can use employment contracts and relocation agreements as alternative records. This would be useful for organisations with frequent employee transfers. 
• LI 2023/D19 Otherwise Deductible Benefits: This instrument provides guidelines for using alternative records for benefits that would otherwise be deductible to the employee. Employers can now use corporate credit card statements or expense management software as alternative records, reducing administrative overhead. 
• LI 2023/D20 Maintaining an Australian Home: This instrument focuses on the alternative records that can be used for benefits related to maintaining an Australian home while an employee is living away for work. Payroll records and housing lease agreements can now be used as alternative records. 
• LI 2023/D21 Fly-In Fly-Out and Drive-In Drive-Out Employees: This instrument allows employers to use employment contracts that specify an employee’s normal residence and employment details as alternative records. This is especially beneficial for industries like mining and construction, where such work arrangements are common. 
• LI 2023/D22 Private Use of Vehicles Other Than Cars: This instrument specifies that employers can use alternative records like mobile apps that record travel distances via GPS and email correspondences to substantiate the usage of vehicles other than cars. This is a significant shift from traditional methods that often required manual logbooks, making the process more efficient and accurate. 

These legislative changes will take effect from 1 April 2024, and employers should prepare in advance to simplify their record-keeping. 

These new record-keeping options offer more flexibility and convenience for employers who already maintain such records for other operational or compliance purposes. They also reduce the risk of non-compliance due to incomplete or missing employee declarations.  

To simplify record-keeping in accordance with the new FBT legislative instruments, employers should undertake an assessment of their existing corporate records. This may involve: 

• reviewing the requirements outlined in the legislative instruments, 
• conducting an inventory of all current records, 

• cross-reference this inventory of current records with the types of records now considered adequate,  
• update internal record-keeping policies and employee training for any gaps identified, 
• run a test audit to validate compliance and maintain documentation of the assessment process for future reference. 

How SW can help

If you need any assistance in understanding how you can simplify your record-keeping in light of these draft legislative instruments, please contact your SW advisor Stephen O’Flynn or Rahul Sanghani. 

Contributor

Rahul Sanghani

The post Simplification in FBT Record-Keeping | Update appeared first on SW Accountants & Advisors.

While the draft Ruling does not introduce significant changes, it provides greater clarity by detailing factors and examples that can be considered. Each taxpayer’s situation will determine the deductibility of their self-education expenses.

The draft ruling present numerous examples, the facts and circumstances of each taxpayer will determine if the expense:

• is incurred in gaining or producing assessable income,
• enables you to maintain or improve a skill or specific knowledge, or
• objectively leads to, or is likely to lead to, an increase in your income.

The full draft Ruling can be viewed here.

For employers who subsidise or reimburse self-education expenses for their employees, it’s crucial to understand the implications of the “otherwise deductible” rule in the context of Fringe Benefits Tax (FBT). Under this rule, if an employee could have claimed a deduction for the self-education expenses had they incurred them personally, the taxable value of the fringe benefit provided by the employer can be reduced. This aligns with the principles laid out in TR 2023/D1, making it essential for employers to review the new guidelines to ensure that any benefits provided are compliant with both income tax and FBT laws.

Details

On 27 September, the Commissioner released draft Taxation Ruling TR 2023/D1, addressing the deductibility of self-education expenses incurred by an individual and replaces TR 98/9 which has been withdrawn from 27 September 2023.

The draft Ruling reflects the current rules following the changes in 2022 that removed the $250 non-deductible threshold for self-education expenses.  Therefore, self-education expenditure is deductible from the first $1 spent.

The Commissioner reinforces that self-education expenses will be deductible under section 8-1 to the extent that they:

• are incurred in gaining or producing your assessable income, and
• Are not:
  • capital, private or domestic in natureincurred in gaining or producing exempt or non-assessable non-exempt (NANE) income
  • prevented from being deducted by a specific provision.

A key focus of the draft Ruling is that self-education expenses will be incurred in gaining or producing assessable income if either or both of the following principles apply:

• income-earning activities based on skill or specific knowledge (Principle 1)
• leads to, or is likely to lead to, an increase in your income (Principle 2).

Principle 1

Where income-earning activities are based on the exercise of a skill or specific knowledge, expenses undertaken to maintain that knowledge or skill will be deductible.

The Commissioner notes following factors that the courts have determined when considering if expenses are incurred to maintain or improve knowledge or skills:

• if the knowledge or skills obtained are too general, there will not be a sufficient connection between the expense and the income-earning activity
• the self-education has a necessary connection to your income-earning activities at the time.

Principle 2

Where self-education will objectively lead to, or likely to lead to, an increase in income from your current income-earning activities, the expenses will be deductible.

The Commissioner notes following factors to assist in this determination:

• the increase in income is clearly linked to the self-education undertaken
• a real opportunity for promotion results from the self-education
• the self-education leads to or is likely to lead to a higher pay grade in your current income-earning activities
• the self-education leads to or is likely to lead to a bonus or higher pay grade once completed
• advancement of employment and salary must be a substantial part of you motives for undertaking he self-education.

The draft Ruling also highlights that if you were to cease your income-earning activity whilst you were completing a course, only expenses incurred up to the point when the activity ceases are deductible.

Exclusions

Another key focus of the draft Ruling is the following exclusions that will not be incurred in gaining or producing assessable income:

In addition to examples relation to each principle and exclusion, the Commissioner provides examples of self-education expenses relating to the following:

• course fees (including work-related conferences, HECS-HELP loan, VET Student loan etc.). Employers should remember that Higher Education Loan Program (HELP) charges are not otherwise deductible and the full value is subject to FBT if paid by the employer 
• interest
• books, digital subscriptions and stationery
• airfares, Accommodation and meals (including course and holiday).  This has been an area hotly contested over the years. Unfortunately, the examples provided merely replicate the existing examples in TR 98/9 and are quite simplistic and have an obvious outcome
• transportation costs

Apportionment

The Commissioner says that if an expense is not entirely incurred in gaining or producing your assessable income, it may be apportioned in certain circumstances.

Expenses can be apportioned in the following ways:

• according to its particular purpose where some parts are for an income-producing purpose, and some are not (where the expense has district parts), or
• on a fair and reasonable basis based on your facts and circumstances where the expense is singular.

FBT

From an FBT perspective understanding the “otherwise deductible” rule is of paramount importance. This rule stipulates that if an employee would have been eligible to claim a deduction for self-education expenses had they paid for them out-of-pocket, the taxable value of the fringe benefit that the employer provides can be reduced accordingly. However, to ensure that the otherwise deductible reduction is obtained, an employer should:

• obtain Employee declarations
• ensure that the benefit is covered by a Recurring fringe benefit declaration provided by the employee, or
• ensure that the benefit is covered by a No-private-use declaration prepared by the employer.

This is particularly relevant in light of the newly released draft Taxation Ruling TR 2023/D1, which provides updated guidelines on what qualifies as a deductible self-education expense.

Employers should closely review these new guidelines to ensure that the benefits they offer align with the ruling’s principles. By doing so, they can optimise their FBT liability while also ensuring compliance with income tax laws. This dual compliance not only mitigates the risk of potential penalties but also enhances the employer’s ability to provide meaningful benefits that support employees’ professional development.

How SW can help

The ATO is currently seeking comments on the new draft legislation, with the comments period closing on 27 October 2023.

Once TR 2023/D1 is finalised by the ATO, it is important to note that the ruling will apply both prospectively and retrospectively.

Please reach out to your usual SW advisor or one of our experts for more information about deductibility of self-education expenses or what the draft Tax Ruling might mean for you.

Contributors

Rahul Sanghani

Blake Trad

The post Tax deductions for self-education expenses appeared first on SW Accountants & Advisors.

Janelle’s clients have included those that operate in the following sectors: IT, professional services, wholesale importing, property development and investment, and not-for-profit.

Janelle has demonstrated capability in delivering outstanding outsourcing services for start-up companies, SME and publicly listed companies and Australian subsidiary entities of large multinational groups.

Janelle provides specialist advice on all employment related taxes including: GST, FBT and salary packaging. She advises clients on the following areas:

• Audit risk for indirect tax compliance
• Payroll tax
• WorkCover for employees and contractor arrangements
• Financial analysis and management reporting
• Financial modelling
• Business structuring.

Janelle is a member of the Institute of Chartered Accountants.

The post Janelle McPhee, Partner appeared first on SW Accountants & Advisors.

The draft legislative instruments specify acceptable alternative record-keeping obligations (other than an employee declarations) in respect of expense payment fringe benefits.  Whilst they are still in draft, they are intended to apply for the year ending 31 March 2023.

This is welcome news for many employers, as the changes will significantly reduce the volume of record duplication and the ever-challenging task of chasing employees for declarations to calculate FBT liability.

Draft FBT instruments

Following a review of record keeping requirements last year, proposed changes to travel diary and relocation transport records were released, and the ATO has now issued the following four draft instruments for consultation:

1. LI 2023/D3 in respect of overseas employment holiday transport
2. LI 2023/D4 in respect of travel to an employment interview or selection test
3. LI 2023/D5 in respect of remote area holiday transport
4. LI 2023/D6 in respect of car travel for a work-related medical examination, work-related medical screening, work-related preventative health care, work-related counselling or migrant language training

The draft instruments propose that employers be able to maintain alternate records to reduce the taxable value of transport benefits.

It has been clarified that this information can come from different records, but must be in English. This will allow employers to rely on existing corporate records, including travel calendars.

Records include:

• details of the employee and associates, including the number of family members who travelled in the car (if applicable)
• the make and model of the vehicle driven
• departure and arrival location, including the address
• the dates of travel, and
• the total number of whole kilometers travelled, not excluding any kilometers travelled whilst at the destination.

How can SW help?

With the intended date of application to be from 1 April 2023, it is an ideal time for employers to review their current FBT processes, with a view to adjustments for these alternative records from 31 March.

The majority of FBT lodgments are due by 21 May.

Assisting employers to ease the FBT return preparation process is a key service of the SW Tax team. Our experts are on hand to advise you, and our proprietary CTSplus FBT software is highly automated to assist employers. Please reach out to the team for a complimentary exploratory conversation.

If you have any thoughts or suggestions regarding the draft legislative instruments, please contact your SW advisor or the contacts here.

Contributor

Rahul Sanghani

The post FBT record keeping relief for employers – ATO draft changes appeared first on SW Accountants & Advisors.

During these webinars our tax experts will provided an update on:

• New and topical developments including recent cases and ATO FBT compliance activity
• FBT recap and hot topics – including exempt electric vehicles
• Global mobility – including proposed tax residency changes and flexible remote working arrangements 
• Superannuation and ATO audit activity 
• ATO’s updated ruling on employee v contractors
• CTSplus FBT demo – Flexible cloud solution that makes FBT simple

Expert speakers

Stephen O’Flynn
Director, Tax
SW

Helen Wicker
Director, Tax
SW

Justin Batticciotto
Associate Director, Tax
SW

Tony Principe
Associate Director, Tax 
SW

Rahul Sanghani
Senior Manager, Tax 
SW

Alice Mulvogue
Assistant Manager, Tax
SW

The post Employment Taxes update 2023 appeared first on SW Accountants & Advisors.

Electric Vehicles and FBT 

On 25 November 2022, the Australian Government passed the Treasury Laws Amendment (Electric Car Discount) Bill 2022, which provides a fringe benefits tax (FBT) exemption for low and zero-emission cars from 1 July 2022. 

The exemption will only apply to the following cars:  

• battery electric vehicles –which use only an electric motor and are not fitted with either a fuel cell or an internal combustion engine
• hydrogen fuel cell electric vehicles – vehicles charged by a fuel cell
• plug-in hybrid electric vehicles – a motor vehicle that uses an electric motor that can be plugged in and charged with electricity but also contain an internal combustion engine. 

Key points to note in relation to this exemption are: 

• the exemption only applies to current employees
• the exemption is only available to cars valued below the luxury car tax threshold. For fuel-efficient vehicles the threshold for the 2022-23 financial year is $84,916
• unlike other exemptions, the value of the exempt car benefit will be included in an employee’s reportable fringe benefits amount
• this exemption will be reviewed after three years to assess electric car uptake.  

This exemption is available even if the vehicle is salary packaged.  This is, therefore, a great opportunity for employees to salary package these cars, which can result in significant savings for them.  It is estimated that the annual tax savings on a $74,000 electric car is $14,400. 

FBT Record keeping changes 

Proposed changes¹ have been released to give the Commissioner powers to modify, existing FBT record-keeping obligations, which will allow employers to rely on existing corporate records, instead of existing employee declarations and other prescribed records. 

The purpose of the change is to reduce compliance costs for employers when finalising their FBT returns by providing them with an option to rely on existing or other alternative records that they may hold.  However, where an employer wants to continue with the current practice, they may continue to obtain employee declarations. 

Treasury has also released two draft legislative instruments that provide guidance on what alternative records may be acceptable with respect to travel diaries and the relocation transport declaration.  These are summarised below: 

There is no limit on the number of records that may, in aggregate, meet the information requirements, and information can come from multiple sources.  So, in practice if the employee’s calendar includes sufficient details, it may be the only record that employers need to maintain. 

If the bill receives Royal Assent by 31 March 2023, it is expected that the measures will be first effective from the FBT year commencing 1 April 2023. 

If you have any questions in relation to this FBT exemption, please contact your usual SW advisor. 

Contributors:

Rahul Sanghani, Senior Manager

Ophelia Katrivessis, Senior Consultant

¹ The Treasury Laws Amendment (2022 Measures No 4) Bill 2022 

The post Electric Car Discount Bill passed to exempt EV from FBT appeared first on SW Accountants & Advisors.

During these webinars our tax experts provided an update on:

• New and topical developments including recent cases and ATO FBT compliance activity
• FBT recap and hot topics – including impacts of COVID-19 in Australia
• Global mobility – including proposed tax residency changes and flexible remote working arrangements
• Superannuation and ATO audit activity
• Payroll tax – including the impact of recent cases on employee v contractors

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Stephen O’Flynn Director, SW	Sam Morris Director, SW	Helen Wicker Director, SW
Justin Batticciotto Associate Director, SW	Tony Principe Associate Director, SW	Rahul Sanghani Senior Manager, SW

The post Employment Taxes update 2022 appeared first on SW Accountants & Advisors.